The uncertainty problem

James Packer is right. In his interview with The Australian Financial Review Magazine last week, he said
Julia Gillard
was perceived to be anti-business.

The big-ticket items of the Gillard government (and indeed the Rudd government) all have had at least one of the following features – more government spending, higher taxes, greater regulation. From the national broadband network to the carbon tax to the reregulation of the labour market, there’s a consistent theme that government knows best.

There’s not much in that agenda that could be described as “pro business". And while one or two business leaders and their associations have expressed doubts about aspects of some of these policies, no one has yet summed it up the way Packer did. He said what many think but are afraid to say out loud.

To be fair to the Prime Minister and her ministers, most of them would have no idea there’s another way to run the country. Very few ministers have any understanding of private enterprise and what it’s like to work in an organisation that isn’t the government or a trade union. Very few would have had any personal experience of how to navigate the labyrinth of unfair-dismissal laws, for example, when having to deal with an underperforming employee.

It’s not only the Labor Party that sometimes struggles to understand what’s happening outside the confines of the parliamentary precinct. After the introduction of the goods and services tax when small business was in an uproar over the mass of paperwork required by the business activity statement, most Coalition MPs had no idea what the fuss was about and no idea what small business owners were talking about.

In the cabinet that Gillard inherited from
Kevin Rudd
, only nine out of 19 ministers had worked in the private sector. Of those nine, seven were lawyers, one had worked in retail, and one was a rock star. As bizarre as it sounds,
Peter Garrett
probably has the most real-world experience of any minister in the Labor government.

A lack of knowledge of how the private sector operates means ministers aren’t able to apply any of their own experience or judgment to what they’re told by business. To help them evaluate the demands of business leaders, ministers are left to rely on their public service departments, staffed by people who have even less knowledge of the private sector than do ministers. It was former head of Treasury
Ken Henry,
who had never had a job that didn’t involve working for the government, who designed the mining tax that cost Rudd his job. Henry is now a “special adviser" to the Prime Minister.

Business “certainty" is apparently one of the reasons why Australia is getting a carbon tax. At the same time as demanding certainty on carbon pricing, business leaders seem to willingly accept swathes of government-induced uncertainty in nearly every other policy area, most notably industrial relations.

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The best example of this uncertainty is the saga over whether retailers can employ school students on shifts of less than three hours. Under the Howard government they could, under Labor’s Fair Work Act they couldn’t. Now after a decision by Fair Work Australia last week, retailers will be allowed to offer 1½ hour shifts from today.

The way the Australian business community seems to change its mind every five minutes doesn’t make it easy for ministers either.

For years, business leaders were clamouring for a carbon price. Indeed the calls from BHP Billiton boss
Marius Kloppers
for business “certainty" was one of the reasons the PM gave for breaking her promise not to introduce a carbon tax.

Then last week,
Heather Ridout
at the Australian Industry Group came out and said “business needs this at present like a hole in the head". Ridout had been one of industry’s strongest advocates for a carbon price.

Gillard is entitled to be confused. She has got herself into the position of being regarded as “anti-business" because she’s introducing a tax that, until a few months ago, business said it wanted.

The chief executives on the Business Council of Australia are right to be concerned that the “reform" debate has been hijacked by the carbon tax and questions like population policy and welfare reform have been neglected.

But when Rudd first set out the terms of the debate about a carbon price as a “moral" challenge, those chief executives didn’t quibble with his description. Moral challenges have the tendency to crowd out everything else.